Buying Bitcoin in South Africa does not come without risk, hence, how you buy Bitcoin is extremely important. The preferred method of buying Bitcoin is through an Exchange, however, there are many other ways of buying bitcoin available to South Africans. Through these other ways of buying bitcoin, they can be just as effective as an Exchange, it just depends on which investment strategy you are intending to implement.
The ways of buying Bitcoin can be broken down into:
- Exchange
- Peer to peer
- Broker (OTC)
- Payment for goods and services
- Mining Bitcoin
- Bitcoin ATM
Top 5 South Africa Bitcoin and Cryptocurrency Exchanges
South Africa Bitcoin Exchanges
An Exchange is a platform whereby buyers and sellers of Bitcoin (and other cryptocurrencies) meet. There are centralized and decentralized platforms which means either: run by one person or run collectively among a group. But overall, there is very little difference from the point of view of a user.
We highly recommend using an Exchange if you are just starting out with buying bitcoin (and to a lesser degree, if you only intend transact occasionally).
When choosing the right Exchange there are several factors to consider. In our opinion, priority should be placed on:
Legality – where the exchange is licensed and regulated. This is crucial for users who may experience issues and have complaints to be raised. Most licensed and regulated exchanges will have a legal avenue for complaint resolution. This means the overseeing government will enforce complaint resolution which protects users of the exchange. As a South African, naturally an exchange that is located in South Africa should give you the best protection, assuming the South African laws are upheld.
South African Rand – Local regulated and licensed exchanges will accept ZAR, but not all global exchanges do. Make sure you choose an exchange that accepts deposits and withdraws in ZAR, otherwise it’s pointless signing up to it.
Track record – the exchange has a history that shows clients monies have been successfully withdrawn, and without delay or difficulties. It is very difficult to gauge, however, assessing the number of complaints and length of time of withdrawal is a great indicator of the track record of an exchange. Please note, many exchanges have received bad reviews and complaints which are NOT true. They are spammed bad reviews that are posted up by competing exchanges. It therefore is extremely difficult as a user to see through the fake complaints
Trade volume – this is important for those who intend to trade regularly. Trade volume is determined by the number of buyers and sellers. The more buyers and sellers, the higher the trade volume, the more liquidity, and a better exchange rate. Bid and ask spreads are narrower with higher trade volume. BUT, many exchanges will fake their volume. They artificially inflate their volumes to attract more users and clients.
Ease of Use – this is an absolute must both beginners and experienced users of buying Bitcoin. Each buyer of bitcoin has different computer and mobile phone skills. Some take to using technology very quickly, while some find it confusing and frustrating. If you fall into the latter category and want to start out with buying Bitcoin it is best to find an exchange that is easy to use. BUT, even though who are experienced need to find an exchange with a good layout and easy to read buy and selling prices. Too often, buyers and sellers can accidentally press the wrong button and execute an order. The last thing you want is to buy bitcoin at a price that you didn’t intend to!
Security of the site – has the site been hacked before? Though not necessarily a true indicator of how strong or weak an exchanges security is, it does lend some weight to how the site is operated. Unfortunately, the larger the exchange the more exposed they would be to hackers. Hackers tend to target large exchanges because they hold the largest amount of bitcoin. Conversely the larger exchanges, recognize they are more susceptible to being targeted by hackers and thus invest more with security. Smaller exchanges, by and large, are less prone to being targeted by hackers.
Fees – lastly you will incur a fee on transactions (buying or selling bitcoin) and you may incur a fee to deposit monies into your account on the exchange. The emphasis of choosing an exchange with fees is difficult to judge. As a day trader of bitcoin, yes, you should find an exchange with low fees. If you continue to buy and sell bitcoin and the fees are high, you are lowering your chances of making a profit with the fees eating away your earnings. For a long term trader, fees aren’t as important. Long term is the goal, and therefore with very few transactions the fees will be immaterial.
Other Ways To Buy Bitcoin in South Africa
There are several other ways to obtain Bitcoin. You do not need to go through an exchange, however exchanges are the most popular and preferred method.
We outline the other ways you can buy bitcoin in South Africa.
Bitcoin ATMs and Location
In South Africa, there are 4 cities that have Bitcoin ATMs (BTMs). These machines work much like the usual ATM for fiat currencies. Pretoria tops the list with two machines. Next is Cape Town, Nelspruit, and Johannesburg with one Bitcoin ATM in each city. To use the machine, you need to have a Bitcoin wallet loaded on your smartphone that will generate a QR code for the BTM to read. While you can use the BTM machine to deposit Bitcoin to your wallet, you cannot use it to withdraw your earnings. BTM service costs around 10% fee per transaction.
| PROVINCE | OPERATOR | ADDRESS | HOURS | LIMITS |
| Pretoria | Saverite Florauna | Corner West and Brits, Pretoria | 24/7 | Buy only: ZAR 21000/txn, Daily: ZAR 100,000 |
| Pretoria | Woodlands Boulevard Mall | Cnr Garsfontein Rd and De Villebois Mareuil Dr Pretorius Park | ||
| Cape Town | Cape Town Bitcoin | 1st Floor 38 Wale Street, Cape Town | Buy and Sell | |
| Johannesburg | Sandton City | Unit U61a, Sandton City 83 Rivonia Rd, Sandhurst Sandton, 2196 | 9am – 8pm Mon to Sat 9am- 6pm Sun | Buy only: 14.2 % fee. ZAR 10,000/txn Daily: ZAR 100,000 |
| Nelspruit | Bitmart | 39 Sitrus Crescent, Madison Square, Nelspruit Mpumalanga | 8am – 5pm Mon to Fri 8am – 1pm Sat |
Buy Bitcoin Using Credit/Debit Cards
You can also buy BTC using your credit/debit cards issued by MasterCard, Visa, or Verve. Even with your credit/debit cards, you still need to go through an exchange. Using a credit/debit card is slightly expensive, as the credit/debit card company would charge a fee for processing the transaction.
Get Paid Bitcoin
If you are an online entrepreneur, you can receive payments from your clients in Bitcoin from across the world. The most popular payment processor for South Africans that supports Bitcoin transactions is PayFast. This facility automatically converts Bitcoin payment to Rand and credits the same to the user’s bank account.
There are other reputable platforms that can help you facilitate Bitcoin payment, but be careful because not all payment methods can be trusted.
Mine Bitcoin
Bitcoin mining provides an exciting opportunity for South Africans to increase their cryptocurrency investment portfolios. Bitcoin mining involves securing the network and verifying the transaction. You will get paid in Bitcoin for successfully mining BTC. While Bitcoin mining is not all that profitable due to the cost of acquiring the required equipment and power, you will find it exciting if you are a technology savvy person.
Why should South Africans Buy Bitcoin?
The world is gradually digging deeper into an interwoven chain of debt. Many countries are experiencing the effects of quantitative easy, an economic policy that effectively prints money out of thin air. Through quantitative easing, the local currency depreciates with the debt devaluing, gradually becoming worthless. It is one way of a country with significant debt of “paying” it off, however, it has a detrimental impact to the citizens of the country with their wealth diminishing.
South Africa is a country that has significant sovereign debt. And this debt is ever growing due to the Government’s extensive borrowing habits to fund public services and infrastructure programs that are often seen as poorly managed to down right corrupt. With no end in sight with reformation of economic policies and a Government that will genuinely act in the best interest of the people of South Africa, there is growing concern that the ZAR will devalue. (In fact, the ZAR has already devalued by a half in the past twenty years).
Many believe that South Africa is heading down the same path as its northern neighbor, Zimbabwe. Zimbabwe is caught in hyper-inflation and its currency is in a free fall. Wealth simply cannot be accumulated with cash held at bank, because its fiat currency continues to depreciate.
Accordingly, Bitcoin is seen as an insurance policy to protect against the future of South Africa’s economic policies. Even though Bitcoin is volatile, it will experience its ups and downs, the fact is that it can go up. The supply of Bitcoin cannot be manipulated and therefore deflationary effects due to money printing is not possible. The value is determined globally and cannot be influenced by Government directly. (Indirectly Government’s do have the ability to make Bitcoin unlawful, however this is unlikely). On the other hand, the Rand is localised to how well the South African economy and the management of the country’s debt.
There is very little optimism of the Government acting in the interest of the people. Hence it is anticipated that the Rand will devalue and could potentially collapse. This means, those who are holding ZAR will be losing wealth. Buying bitcoin is a way of avoiding losing wealth.
South Africa’s Legality and Regulations for Buying and Selling Bitcoin
Buying and selling cryptocurrency in South Africa is legal but it is currently not regulated. What does this mean? It means that there is no real framework to support a South African supported exchange or business that facilitates the buying and selling of bitcoin. There is no license to purchase, there is no compliance to fulfill. That said, you can’t simply create a business of buying and selling bitcoin and charging a fee for the service. For personal purchase and use of Bitcoin technically without regulation, you shouldn’t be allowed to do this, but it is legal hence it is not against the law.
Normally South African regulation of financial services is governed through the South African Reserve Bank (SARB). However, they have issued a formal statement that categorically declares that it “does NOT oversee, supervise or regulate the virtual currency landscape, systems and intermediaries for effectiveness, soundness, integrity or robustness”. That said, it has then issued warnings to South Africans advising them of the risks associated with investing in virtual currencies such as Bitcoin and Ethereum.
The SARB’s role is solely for the regulation of South African legal tenders. Accordingly, SARB defines legal to exclude Bitcoin. Bitcoin falls outside of the definition of legal tender and any payments made via Bitcoin in South Africa “may not discharge a debtor of a monetary obligation and purchasers run the risk that their Bitcoin payments are not recognised by South African law”.
In short, SARB deems transactions performed to be “at the end-user’s sole and independent risk and have no recourse to SARB”.
SARB further discharges the responsibility by stating virtual currencies are “not defined as securities in terms of the Financial Markets Act, 2012 (Act no. 19 of 2012) and are not subject to regulatory standards that apply to the trading of securities”. Though virtual currencies are outside of SARB’s responsibility of regulation, it extends its warnings to South Africans that any gain or loss with Bitcoin trading is subject to tax. As with many facets of government regulation, changes are slow and responsibility remains grey if not outwardly discharged. This leaves buying and selling bitcoin legal but their boundaries are unknown. Globally, Anti Money Laundering and Know You Customer compliance requirements are needed for any exchange, and this remains in place for South Africans.
Surprisingly a consultation paper has been drafted by SARB that addresses regulation of virtual currencies. This paper recommends regulations to be established for Bitcoin Bitcoin exchanges and Bitcoin ATMs. It’s anticipated that regulatory changes will take many years to come.
South Africa Bitcoin and Cryptocurrency Market Developments
South Africa is leading in the African continent behind Nigeria as one of the major hubs to adopt Bitcoin as an alternative payment method. The rise in the adoption of Bitcoin by South Africans may not be unconnected to the economic and political uncertainties in the country. As such, South Africans are searching for viable investment opportunities that are devoid of government regulations.
South Africa is a leader in the usage of Bitcoin for payment of goods and services. However, the pace at which vendors and merchants accept Bitcoin for payment of goods and services is still quite slow. If you use PayFast, you can accept Bitcoin through the payment processors’s gateway for a fee. Then PayFast would credit your local bank account with Rand.
A few examples of merchants that currently accept Bitcoin are:
- Takealot.com
- Superbalist.com
- RunwaySale
- Raru
- Cape Coffee Beans
- Custom Candies
- The Tea Merchant
In fact, Binance is regularly updating its list of supported merchants and vendors so that Bitcoin enthusiasts can see at a glance where they can spend their coins.
Check with your favorite merchant to see whether or not they accept Bitcoin payment.
Furthermore, many African nations are taking up bitcoin far quicker than any other continents. Studies have shown that 30% of the nation hold bitcoin or crypto while 50% who have not, are aware of virtual currencies and are considering using it.
This is quite high when compared to other developed countries who only have an uptake of 10% with awareness of only 45%.
